Hoo Ke Ping told FMT that both measures are good for the country.
“Rationalisation of subsidies, which have been abused for decades, is the right move and so is having the GST. This cannot be denied.
“Lim is ignoring the facts on GST. If the GST was as bad as some people make it out to be, why would more than 160 countries implement it,” he said, adding that the GST is without question the most comprehensive tax system in the world.
According to Ho, the GST has helped reduce the shadow economy and corruption, as well as made it more difficult for people to launder money.
He explained that the shadow economy referred to business transactions – for goods and services produced alongside those in the formal economy – that are paid for in cash and not declared for tax.
“Shadow economies are present in developing countries. Monies in the shadow economy also include illicit funds from corruption, illegal gambling, drugs and smuggling among others.
“When you have GST, it makes the operating in the shadow less feasible.”
In 2015, then deputy finance minister Ahmad Maslan said the World Bank estimated Malaysia’s shadow economy to be about 30% of the country’s gross domestic product (GDP).
It was previously reported that under the GST, only traders who have updated sales and purchase records can claim input tax and apply for bank loans.
Traders who have registered for the GST but still purchase goods or services from the black market won’t be eligible to claim input tax and this would increase their cost of doing business.
Hoo added the nature of the GST, which required business owners to keep proper financial records also made it more difficult to be corrupt and to launder money, though he noted it was still possible.
Yesterday, Lim, who is also DAP secretary-general, said the government could do away with the GST as it received more than RM20 billion in savings from the rationalisation of subsidies for cooking oil and sugar.
Lim said the savings from the reduced subsidies had offset the major reduction in revenue from Petronas owing to the drop in the price of crude oil.